The preliminary eurozone composite purchasing managers index
(PMI) tumbled to 52.8 in August from 53.8 in July.

While any reading above 50 signals growth, a decline number
signals deceleration. Economists were forecasting 53.4 for the
month.

"With the PMI Output Index slipping slightly to 52.8, the region
remains on course to register growth of only around 0.3%-0.4% in
the third quarter, a level that is unlikely to stimulate any real
turnaround in the labour market," wrote
Markit's Rob Dobson. "Even before rising geopolitical
headwinds began to buffet the economy, the double-digit
unemployment rate prevailing in the eurozone was already
excessively high. Signs are that the modest job creation of
recent months has stalled in August."

During the three months ending July, GDP registered 0.0% growth.
And hopes for a recovery are quickly fading.

"The PMI surveys for the euro area suggest that the economy may
be stagnating again in the third quarter," wrote Bloomberg
economists David Powell and Niraj Shah. "They also continue to
point to weak inflationary pressures."

The services sub-index fell to 53.8 from 54.2, and the
manufacturing sub-index fell to 50.8 from 51.8.

"The the real story is the ongoing relative weakness in the
industrial sector," said Pantheon Macroeconomics' Claus Vistesen.
"This rather worrying trend is driven mainly by the slump in
France, but the manufacturing sector is also relatively weak in
Germany indicating a wide divergence between these two industries
in Europe. The services sector accounts for the largest share of
the economy, but movements in the manufacturing sector tends to
have a better correlation with movements in GDP."

Germany's manufacturing PMI fell to 52.0 in August from 52.4.
France's fell to 46.5 from 47.8.

"Our bet is that a big part of the recent indication that the
headline eurozone PMI is overestimating growth is probably due to
this divergence," Vistesen said. "We expect Q3 GDP to be better
than the poor 0.0% quarter-on-quarter due to a rebound in German
growth, but the sequential drop in the manufacturing PMIs, and
the fact that the Q3 composite PMI is now lower relative to Q2
has increased risks to the downside."

All of this puts increasing amounts a of pressure on the European
Central Bank to ease monetary policy further in an effort to
stimulate growth and stoke inflation.